Friday, September 16, 2005

According to a report by an organization called the Silicon Valley Leadership Group, Seattle's housing is among the more affordable of the eight "technology regions" they surveyed.

For those in Seattle who complain about housing costs, traffic delays, taxes or other issues, the report provides a little bit of comfort.

At least you don't live in Silicon Valley, where the median home price is $723,914, motorists spend an average of 72 hours a year in traffic delays and the state income tax is among the highest in the nation.

Okay, I'll give them that. California is about the last place on Earth I would want to live. No offense to my brother or my wife's familiy (who live there now). Of course I believe that salaries are a bit higher there, though not necessarily high enough to cancel out the ridiculous cost of housing. What really cracked me up though was this statement:

[Seattle] also performed well in terms of housing, with half of the available homes affordable for those who make the median income. That compares with just 20 percent in Silicon Valley and 30 percent in Boston.

I'm curious to know exactly how they define "affordable." The median income in Seattle comes in at around $55,000. The median house costs $385,000, meaning that half the houses cost less than that. Doing some rough calculations, mortgage payments on a $350,000 home with 20% down and 6% interest rate would be roughly $1,675 a month. Don't forget property taxes, which would come in at roughly $480 a month, for a total of $2,155, or 47% of the median income's pre-tax monthly earnings (that's not even considering insurance or maintenance costs). Plus, who has $70,000 laying around for a down payment? "Affordable" indeed.

If you read the source story in the Seattle P-I that I got my $45,000 from, that is "real median household income." Though I just realized that I grabbed the national #, not the King County #. Whoops. I'll probably correct my post later.

Using the King County income of $55,000, the mortgage payment alone comes in at 33% of the pre-tax income. Of course, as texasdiver points out, that fails to take into account insurance and taxes, which would amount to an additional $250-$400 a month, bringing the total monthly amount required for housing up to the 40% range.